Israir (6H, Tel Aviv Ben Gurion) has accepted ILS33 million shekels (USD9.5 million) in aid from the Israeli state in exchange for convertible bonds for a period of three years from the date of the bonds’ allocation, the airline has said in a stock exchange filing.

The funds, to be given in US dollars according to the conversion rate on the day they are provided, will be passed directly from the Ministry of Finance to fully-owned subsidiary Israir Aviation and Tourism.

The stock “will be assigned to the state as collateral for the repayment of a loan,” the disclosure said.

The subsidiary will use the aid for partial repayment of a loan given to it of ILS8.15 million (USD2.34 million), of which it has so far repaid ILS2.17 million (USD625,000). Israir will convene a shareholders’ meeting next month to seek approval for the proposal.

The move “is expected to save the subsidiary costs in the form of interest expenses of the said loan, where the benefit as mentioned is expected to be recognised in the company’s financial statements,” the disclosure explained.